Understanding the Current Rating
The Strong Sell rating assigned to Mangalam Drugs and Organics Ltd indicates a cautious stance for investors, signalling significant risks and challenges facing the company. This rating is derived from a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the stock’s attractiveness and risk profile in the current market environment.
Quality Assessment
As of 26 December 2025, the company’s quality grade is classified as below average. This reflects ongoing operational difficulties, including persistent losses and weak profitability metrics. The company has reported operating losses and a low return on equity, averaging just 5.83%, which suggests limited efficiency in generating profits from shareholders’ funds. Additionally, the firm’s ability to service its debt is strained, with a high Debt to EBITDA ratio of 5.66 times, indicating elevated financial leverage and potential liquidity concerns.
Valuation Considerations
The valuation grade for Mangalam Drugs and Organics Ltd is currently deemed risky. The stock trades at levels that are unfavourable compared to its historical averages, reflecting investor apprehension about the company’s future earnings potential. Over the past year, the stock has delivered a return of -79.08%, underscoring significant market pessimism. This steep decline is compounded by a dramatic fall in profits, which have decreased by over 300% in the same period. Such valuation metrics suggest that the market is pricing in considerable downside risk.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend Analysis
The financial trend for Mangalam Drugs and Organics Ltd is negative. The company has declared losses for three consecutive quarters, with the latest quarterly PAT at a negative ₹7.35 crores, representing a sharp decline of 201.2% compared to the previous four-quarter average. Net sales have also dropped to a low of ₹49.54 crores in the most recent quarter, while interest expenses have risen to ₹5.03 crores, the highest recorded. These figures highlight deteriorating operational performance and increasing financial strain.
Technical Outlook
From a technical perspective, the stock is rated bearish. The price trend has been consistently downward, with the stock losing 0.75% in the last trading day and 27.33% over the past month. More notably, the stock has plummeted by nearly 70% over the last six months and has underperformed the BSE500 benchmark index in each of the last three years. This persistent underperformance signals weak investor confidence and limited short-term recovery prospects.
Additional Risk Factors
Investors should also be aware of the high proportion of promoter shares pledged, currently at 34.58%. This represents an increase of 21.35% over the last quarter and can exert additional downward pressure on the stock price during market downturns. Such a high level of pledged shares often signals financial stress within the promoter group, which may further complicate the company’s capital structure and investor sentiment.
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Implications for Investors
The Strong Sell rating on Mangalam Drugs and Organics Ltd serves as a clear caution to investors. It reflects a combination of weak fundamentals, deteriorating financial health, unfavourable valuation, and negative technical signals. For risk-averse investors, this rating suggests that the stock is likely to continue facing downward pressure and may not be suitable for long-term holdings at present.
However, investors with a higher risk tolerance might monitor the company closely for any signs of operational turnaround or improvement in financial metrics. Given the current market conditions and company performance, a thorough due diligence process is essential before considering any exposure to this stock.
Summary of Key Metrics as of 26 December 2025
- Mojo Score: 3.0 (Strong Sell)
- Market Capitalisation: Microcap
- Debt to EBITDA Ratio: 5.66 times
- Return on Equity (Average): 5.83%
- Quarterly PAT: -₹7.35 crores (down 201.2%)
- Quarterly Net Sales: ₹49.54 crores (lowest recent level)
- Quarterly Interest Expense: ₹5.03 crores (highest recent level)
- Promoter Shares Pledged: 34.58% (up 21.35% last quarter)
- Stock Returns: 1Y -79.08%, YTD -79.43%, 6M -69.82%
These figures collectively underpin the current rating and highlight the challenges Mangalam Drugs and Organics Ltd faces in regaining investor confidence and financial stability.
Conclusion
In conclusion, Mangalam Drugs and Organics Ltd’s Strong Sell rating by MarketsMOJO reflects a comprehensive assessment of its current financial and market position as of 26 December 2025. Investors should approach this stock with caution, recognising the significant risks and the need for close monitoring of any future developments that could alter its outlook.
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